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Penalties
Year Deficiency Sec. 6662(a)1 Sec. 6663
1999 $45,969.00 $2,434.20 $25,348.50
2000 42,401.00 -- 31,778.25
2001 38,393.00 -- 28,761.00
After concessions,2 the issues remaining for decision are: (1)
Whether petitioner failed to report income from La Belle Vie,
petitioner’s nail salon business; (2) whether petitioner is
liable for the section 6662(a) penalty for 1999 for the
underpayment attributable to unsubstantiated deductions; (3)
whether petitioner is liable for the civil fraud penalty pursuant
to section 6663 for a portion of the 1999 deficiency and the
entire 2000 and 2001 deficiencies; (4) whether, in the
alternative, if petitioner is found not to be liable for the
civil fraud penalty pursuant to section 6663 on any portion of
the underpayment for any of the years in issue, petitioner is
liable for the accuracy-related penalty on such portion of the
underpayment pursuant to section 6662.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
2 The parties stipulated that petitioner received small
amounts of interest and dividend income in each of the 3 years at
issue that were not reported on petitioner’s income tax returns.
The parties also stipulated that petitioner incurred a $30
capital loss in 2001 that petitioner did not report on her 2001
income tax return. In her briefs, petitioner concedes that she
cannot substantiate $38,211 in business expenses for 1999.
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Last modified: November 10, 2007